Oklahoma captures $12.8 million in high bids from state oil, gas lease sale

Oklahoma captured roughly $12.8 million in high bids during the state's latest quarterly oil and gas lease sale Dec. 18, far exceeding the previous quarterly sale in June, according to preliminary figures provided by auction sponsor Oklahoma Commissioners of the Land Office.

A total of 352 tracts spanning 20,294 acres were available in the sale and 275 of those parcels received bids, with the highest two offers of $560,800 and $512,800 made by Unit Petroleum for 160-acre parcels each in Roger Mills County in western Oklahoma.

"In all, we had 42 different entities placing bids for the December auction," said Chris Wiggers, director of the Mineral Management Division of the Land Office, who is currently evaluating all the bids and expects to award them in a few weeks.

That was double the number of participants in the previous quarterly sale in June, where 21 different entities participated, Wiggers said.

The third-quarter 2024 sale in September was skipped this year due to "other commitments and constraints," but all four quarterly sales should take place in 2025, he said.

Total amount of all bids submitted, including those that were not apparent winning offers, topped $25 million in the December sale. That compared with $2.2 million in high bids and a total $4.2 million for the total sum of all bids across 3,892 acres in the June sale.

Unit bid big in Roger Mills County

Unit also made 17 other offers -- 19 in total -- for Roger Mills acreage, mostly six-figure bids, and was high bidder on all but five. Tulsa-based Unit, founded in 1979, operates in three key regions of Oklahoma and Texas.

Unit was one of the few publicly held bidders in the December sale. Denver-based Cimarex Energy is another publicly held operator; it made six bids, all located in Caddo County in west-central Oklahoma.

Since parcels are of varying acreage sizes, the Land Office looks at the per-acreage amounts bid as a more accurate gauge of bidder interest and willingness to pay for desirable acreage. The highest per-acre bid in the December sale was $4,500, sizably higher than the typical average offer of $1,100 to $1,200 or often less, Wiggers said.

The average price offered per acreage in the December sale was $633, compared with $594 in June.

"Overall, our December mineral lease auction was a huge success," Wiggers said. "This auction gives us great momentum going into 2025."

Most of the bidders were small privately held operators or land brokerage firms hired by E&Ps to place bids, he said.

"My guess is that we'll start seeing assignments next year or a bit down the road, where the bidders will assign the leases to their clients," he added.

Roger Mills County boasted the highest number of tracts offered – 154 – of any of the 17 counties where acreage was available to upstream operators in the December sale.

Custer County and Dewey counties also offered a sizable number of parcels -- Custer offered 74, and Dewey had 49. These three counties represent nearly 80% of all tracts offered in the auction. Most of the other counties featured a dozen tracts or less.

E&P interest centered on Cherokee play

Roger Mills County, along with Custer and Dewey counties, encompasses the Cherokee play, Wiggers said. That acreage captured the highest total of six-figure bids made in the sale, although the majority of bids placed in the auction were more modest -- in the five- and four figures.

"Eastern Roger Mills, western Custer and southwest Dewey [comprise] the Cherokee Shale play," Wiggers said, which is an unconventional reservoir. It has been called one of the most active natural gas development areas in the Anadarko Basin of Oklahoma and Texas.

Upstream companies that made offers for that acreage were likely chasing a mix of oil, natral gas and liquids – similar to the SCOOP-STACK play, he said. SCOOP-STACK is a large unconventional play to the southeast in Oklahoma containing high levels of condensate and gas.

Another cluster of available parcels in the December sale were sited in Caddo, McClain, Grady and Cleveland Counties south and west of Oklahoma City. That area does not have many horizontal unconventional wells, Wiggers said, and may be a western extension of the SCOOP-STACK where the hydrocarbons are found at a relatively deep level.

In addition, a few tracts were offered in Cimarron County in the Oklahoma Panhandle, which chiefly contain oil.

A dozen tracts Lincoln County, in the middle of the state, were also available, but the two bidders for them, Prime NGL and DaviMac Energy, are long-term players that drill in a one-off formation, Wiggers said. Prime NGL's nine bids were nearly $14,000 apiece and DaviMac's three bids were $1,800 each.

"Typically we see that [kind of activity] outside the Cherokee – that is, individual prospects where there's only one player," he said.

A number of state agencies benefit from Oklahoma's oil and gas lease sale monies, but the largest beneficiaries are state public school districts in Oklahoma, he added.